Q:

Is accumulated depreciation considered a liability?

A:

Quick Answer

Accumulated depreciation is considered a contra asset, appearing as a negative balance underneath the asset to which it is assigned in the asset section on the balance sheet. However, accumulated depreciation cannot be considered neither a true asset nor a true liability as it does not meet the qualifications for either category.

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Full Answer

Accumulated depreciation cannot be considered an asset, because the balance(s) stored in the account do not represent something that will produce an economic value in the future. Instead, the balance represents an amount of economic value that has already been consumed.

Accumulated depreciation cannot be considered a liability, either, because the balance is not representative of anything owed to a third party. Rather, the accumulated depreciation line on a spreadsheet is for purely internal use and represents nothing of value to a party outside of the organization.

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    What are examples of contra accounts?

    A:

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    How do you calculate depreciation using the sum of the years' digits?

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    A:

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    How do you read financial statements?

    A:

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